Can I ask you a random question? Okay, here goes.
Can you tell me how many Thai baht I can buy with one US dollar?
I haven’t thought about the baht since 1997, when the Thai currency’s crash precipitated the Asian Currency Crisis.
Back then, I was only in practice a few years and I thought I was a hero, so I did something heroic. I pulled a bunch of money out of the market… after the crash, of course.
And then I saw the market recover while I sat on the sidelines feeling stupid.
Like I said, I was new to investing and I’d never seen a crisis before.
Today we’re hearing about the Greek debt crisis. So people are asking me, “What do you think?”
As in, “what do you think I should do about it?”
So I’ll tell you what I’m doing about it.
Absolutely nothing. Not a thing.
I’ve seen this movie before, and I know how it ends.
Since 1997, I’ve seen…
- The Junk Bond Crash of 1989
- The Tequila Crisis of 1994 (when Mexico devalued the peso)
- The Dotcom Bubble
- The Year 2000 Bug
- The Housing Meltdown
- The Fiscal Cliff
- The Global Financial Crisis
…and in every case, it was scary but the movie ended well for investors who didn’t head for the exits.
If all my clients’ money were invested in Thailand or China or Mexico or the United States or junk bonds or US treasuries or tequila, I’d be scared out of my mind.
So if you sunk your last dollar in Greece, you ought to be freaked out right now.
But if you own a big, comfortable, uberdiversified chunk of all the stocks and all the bonds in the world, it’s time to cover your eyes during the scary part of this Greek tragedy while resisting the temptation to leap from the balcony.
Enduring the crisis du jour—the “feature presentation” if you will—is simply part of the story when it comes to being a long term investor, so grab a bag of popcorn and hold on to your seats.
It’s the only way to get your money’s worth.